30 March 2013

Events in Cyprus eventually took a course not as bad as it looked a week ago. Small savers were spared, share holders and bond holders were hit first and mid to large savers got uneven slashes, depending on how bad was their particular bank. Painful, but way more logical than the brain-dead proposal that initially came out of the Eurogroup. Cyprus is now entering an impoverishment cycle that was likely unavoidable.

This new way of dealing with ailing banks, hitting lenders (into which savers are included) instead of simply offloading debt on sovereign states, marks a clear turning point in the European crisis. Time will tell if this is a good path or not; it is a two edged sword, if on the one hand it protects sovereign states from the risks of the financial sector, it also undermines trust on banks. In a few months time, when it will become clear that Portugal is insolvent, we shall see the real repercussions of this new policy.

Mid week the spotlight was turned on other small states that have economic models similar to Cyprus'. One of these states is Luxembourg, where I presently live, and the answer from the local government was quite interesting, even if somewhat obvious.

23 March 2013

Amateurish. Of all the adjectives used to describe the "aid" package proposed by the EE/ECB/IMF triumvirat to Cyrpus this is probably the sharpest one. Beyond the legal question it raises and the social harm it can inflict, it is a huge strategic blunder. A bank run in Cyprus is now a certainty, rest is to know if it will percolate to other members of the Eurozone. I don't have a particular hunch, but the probability of contagion happening is now much higher than what it was a week ago. And above all, what I don't really get is why was this made without Russia and to a good extent against Russia. It seems like the folk inside the Eurogroup are completely unaware of what's going on outside their offices Unaware that the Russian Government and Gazprom have complete control over our energy system; if they get angry enough to close the gas tap we'll be back to the dark ages in days. I'll expect further developments before a deeper reflection on this mess (time permitting).

And it is precisely gas the inner page story that is important to highlight this week, yet again. Below the fold you'll find a presentation by Alistair Buchanan, head of Ofgem, the UK energy watchdog. Although a few months old, it is well worth the time it takes to listen, describing in great detail how perilous Britain's dependence on gas has become.

16 March 2013

This week the Catholic Church got a new Pope, after the surprising resignation of Benedict XVI. The much awaited announcement habemum papam was followed by an also surprising name: Jorge Bergoglio. After weeks of speculation and many papable lists issued around, the elected is someone that few where aware even existed. It turns out Bergoglio had been the runner up when Benedict XVI was elected; just to show how clueless the media was, and is, on this particular subject, as it unfortunately is in many other domains. So far I'm well impressed with the new pope and I quite like his choice of Francis for a name. May God be with him.

On more material subjects, the news of the week was the weather (I'd never seen so much snow fall in my life). This meant more trouble for the UK, that continues to struggle with its gas supply. Record low reserves and record high prices again this week and the cold seems to set to continue.

10 March 2013

If you're into Space Rock, like me, one day you'll end up bumping into this band called Nektar. In my case it took a few years but I eventually got there. There are all sorts of oddities about Nektar, starting with the fact of this being a British band based in Hamburg. They were well into the German progressive scene of the day and were of one of the first bands working with Dieter Dierks, along side names like Embryo, Gila, Wallenstein and Tangerine Dream. Naturally this has lead some folk to simply classify them as a Krautrock band; a closer look reveals otherwise.

Their second LP, A Tab In The Ocean, was recorded in 1972, with Dierks already well established as a master of the Krautrock scene. It proposes a surprising and exhilarating voyage through some futuristic landscapes never explored before. All wrapped in a recording very particular of its place and place. The strident sound of the guitar and especially some drum elements may make it a though hearing for some, especially those used to Hi-Fi quality. But with some effort the melodies eventually emerge and overwhelm the listener.

09 March 2013

This was an eventful week, with two particular stories of great concern. First I'd like to highlight the intensifying situation in Syria. It was already known that Al Qaeda has been drafting Iraqi young men to fight along the Sunni factions; but on Monday Reuters published a piece confirming that Iraqis are also joining the ranks of the Shi'ite faction leaded by Assad. Later that same day the first armed operation linked to this conflict took place in Iraqi soil, with an Al Qaeda commando ambushing and executing dozens of Shi'ite soldiers that had surrendered to the Iraqi regular army.

The US and the UK seem very interested in fuelling the conflict by arming the Sunni factions; Al Qaeda will surely divert part of these weapons towards Iraq. On the current tack it seems impossible for both Syria and Iraq to emerge out of the conflict with the borders they have today. The effects on neighbouring countries and Petroleum production in the region is unpredictable.

02 March 2013

The story of the week has been the elections in Italy. The English speaking media reacted like the world has ended and markets tanked, but I'm not that impressed. Neither Bersani nor Berlusconi can afford a return to the polls, especially the later. A grand coalition will eventually emerge, not very different from the one that backed Monti, but with Berlusconi back again into some position that can keep him out of jail. I'm not impressed by Grillo either, with his badly recycled Democratic Socialism tainted with some Nationalism. But EPP leaders must understand the forewarning: if they insist on their failed policies of austerity one day someone like Grillo is going to win a major election in Europe.

Thus I prefer to highlight other news, that may be more relevant in the long term.